What is meant by markup in retailing?

Markup in retailing refers to the difference between the cost of merchandise (what the retailer pays for the items) and the selling price (what the customer pays for the items). This concept is fundamental in understanding how retailers price their products to cover costs and generate profit.

When a retailer purchases an item, they incur a cost, and in order to make a profit, they need to sell that item for a higher price. The markup is essentially the additional amount added to the cost price to arrive at that selling price. It is critical for retailers to effectively manage markup to ensure they cover expenses such as operating costs while also remaining competitive in the marketplace.

In contrast, other choices pertain to different aspects of retail and do not accurately define markup. For example, total sales revenue describes overall income from sales, the cost price of merchandise simply indicates what the retailer paid, and discounts relate to reductions in price offered to customers, rather than the calculation that establishes the selling price based on cost.